My previous post about the surface transportation reauthorization bill—TEA for short—ended with a bit of wait-and-see optimism. That was then. Here is a bit of face-facts pessimism to balance it out. It’s the kind of yin yang see-sawing that this town sets the mind to doing. Spend more than a few minutes thinking that things will turn out fine and then…

It would be so much easier if the main actors in the TEA deliberations agreed to settle for current revenue projections.

There is real money and then there is wish money. Real money is in the bank, or will be. Wish money is what we want Congress to produce though new transportation revenue measures. And what is the chance of that happening when?

We can speculate, as many do, that after the 2012 election office holders will muster what it takes to vote for new revenue. But after watching these first months of the New Washington—where donkeys and elephants can’t even agree which of them has the trunk—the best we may have reason to expect of the House, Senate and White House is that they will come to some basic agreement on the overall Federal budget. Set your sights low. A big transportation bill won’t figure into that deal. And a more conservative Senate after the elections may cause our sights to be five clicks lower. Meanwhile the TEA can gets kicked farther down the road.

Barring the use of creative accounting—the sort that will not serve us well as the government feels its way to solid fiscal footing—the options for a 6-year TEA bill could be limited to $556 billion (Obama), $339 billion (Boxer) and, maybe, $230 billion (Mica). The last of those assumes only projected Highway Trust Fund receipts. Those are the choices. In which case…

Let’s here assume Congress, at best, will extend the soon to expire excise taxes to avoid a total collapse of current programs. The choice then that policy makers have is between A) extending current law authorization i.e., SAFETEA-LU and sit tight, and B) approving a new TEA bill that fits the revenue stream.

While hardly our preferred road to travel, the “B” route may not be a bad option. Yes, it would shrink transportation funding on which States and locals—already strapped for cash—now rely for road maintenance, transit projects, bike paths, and other uses enabled by over one hundred programs. But—here’s the yang part–it also could have its benefits along with the pain.

Get past SAFETEA-LU by enacting reform policies e.g., performance metrics, that have emerged from the various advisory panels.

Give States maximum flexibility to put available Federal funds to their best use.

Focus Federal policy on what is in the national interest (building stage coach museums vs. easing interstate chokepoints).

Provide added impetus to enact creative leveraging of other sources of infrastructure funding e.g., expansion of TIFIA, new infrastructure bank.

Force government at all levels to adjust how investment decisions are made—where the priorities are and whether projects can be delivered more efficiently. (Recent testimony from the Congressional Budget Office—“The Highway Trust Fund and Paying for Highways”—provides a helpful review of options and makes the point that “selecting projects carefully can increase the highway system’s contribution to the performance of the economy.”)

Cause States to re-examine their own transportation funding mechanisms and, in States like New Jersey, face up to the under capitalization of transportation trust funds.

Give the nation the taste of intentional under-investing in America and the significant economic consequences of that.

Chairman John Mica (R-FL), facing the facts for months now, has vowed to get a 6-year bill done this year using existing revenue. That’s the best he can do given the current House majority and leadership.

Sen. James Inhofe (R-OK) is the top Republican on the Environment & Public Works Committee that will produce the bulk of the TEA bill. As bullish as he has been on the need to produce a full 6-year bill (with earmarks!) he disagreed this week with his committee counterpart, Chairman Barbara Boxer (D-CA), who said she will put a full bill before her committee. Inhofe acknowledged that Congress may have to make do with current levels of revenue in a 2-year bill.

So here is a tough-love case for moving ahead today: improve the policy but face the fact that Washington, sadly, is not yet ready to go the full measure in addressing the terrible under-investment in our infrastructure. Pbea